The European car rental brand Sixt has raised concerns about the demand for electric vehicles (EVs).
- Sixt reported a significant decline in the market environment for used EVs throughout 2023.
- The company’s financial outcomes were impacted by increased depreciation and reduced earnings from EV sales.
- Sixt’s annual pre-tax profits fell by nearly 16% despite revenue growth.
- The firm is adjusting its strategy in response to these market changes, reducing its fleet of ‘electric risk vehicles’.
Sixt, a leading name in the car rental industry, has voiced significant concerns regarding the current demand for electric vehicles. Despite the push from governmental incentives for greener transportation, consumer interest has yet to align with these ambitions, as evidenced by Sixt’s experiences in the used EV market over 2023.
The German company reported a marked downturn in residual values for electric vehicles, a factor that resulted in increased depreciation and financial losses nearing €40 million last year. This financial strain was compounded by a 16% decrease in pre-tax profits, dropping from the previous year’s figures, even as revenues saw an increase to €3.62 billion.
In Germany, a key market for Sixt, the prices for electric vehicles dropped by more than 20% over the past year. This decline is reflective of a broader hesitancy among consumers to fully embrace e-mobility, as reflected in recent registration figures. Despite substantial marketing efforts and investments in charging infrastructure, the expected growth in demand for EVs has remained elusive.
Due to these challenges, Sixt is proactively phasing out ‘electric risk vehicles’, which are models without secured buyback or leasing agreements and for which the company carries the residual value risk. By the end of February, the proportion of such vehicles in their fleet had diminished by half compared to the previous March.
Looking forward, Sixt remains committed to maintaining electric vehicles within its offerings, but recognises the necessity for flexibility to adapt to market demands and the evolving strategies of automotive manufacturers. Co-chief executive Alexander Sixt noted the importance of customer demand and cost conditions in shaping the firm’s approach, highlighting the significant achievements of the company despite the adverse market conditions for e-mobility.
Overall, Sixt’s cautious yet adaptive strategies reflect the complex dynamics of integrating electric vehicles into the car rental market.
